Whiplash consultation: full steam ahead

The MoJ has today launched a consultation on proposals that will reduce the number of whiplash claims and allow insurers to cut premiums. The consultation paper outlines plans to scrap the right to compensation or put a cap on the amount people can claim for minor whiplash injuries. Capping compensation aims to reduce the average payout from £1,850 to a maximum amount of £425. Compensation would only be paid out if a medical report was provided as proof of injury.

Other measures include:

• Introducing a transparent tariff system of compensation payments for claims with more significant injuries.
• Raising the limit for cases in the small claims court for all personal injury claims from £1,000 to £5,000.
• Banning offers to settle claims without medical evidence. All claims would need a report from a MedCo-accredited medical expert before any payout.

The government’s commitment to tackle whiplash claims is longstanding. Confirming its intention to bring forward measures to reduce the costs from unnecessary whiplash claims in last year’s Autumn Statement and Spending Review, details of the proposals have been eagerly awaited for almost 12 months. More recently, it appeared that the reforms had been shelved – assumed to be due to the change in political energy following the Brexit result, together with an apparent shift in priorities of a new Lord Chancellor.

Therefore, today’s announcement will come as quite a surprise. The short consultation period will place pressure on all concerned to evaluate the proposed measures and consider the impacts on their particular book of business.

The boundaries of the consultation also appear to go further than previously proposed. Consequently, it is likely to generate a forceful response from those who do not welcome the reforms. In particular, we anticipate an outcry from those who deal with injury claims beyond whiplash and motor-related injury claims. Employers’ liability and public liability claims will fall within the change, including lower value disease claims, such as noise induced hearing loss claims. The detail – and operation - behind removing compensation rights for ‘minor’ whiplash is also likely to be met with heated debate.

As always, such reform will need proper thought and consideration to ensure unintended consequences are anticipated and avoided. In particular, the opportunity for non-regulated claims management companies to step into this arena is apparent. Regulatory measures will be needed to ensure that 'claims farming' practices are prevented; thereby protecting the genuine claimant.

The consultation will run until 6 January 2017.

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